The bank on Monday identified how the rise of stablecoins, digital assets pegged to fiat currencies like the U.S. dollar, could accelerate a trend of financial diversification away from traditional banks in EM economies.
“As stablecoins grow we think there will be several unexpected outcomes, the first of which is the potential for deposits to leave EM banks to be deposited in stablecoins instead,” Geoffrey Kendrick, Global Head of Digital Assets Research at Standard Chartered, said in a note to Yellow.com
“Indeed, we estimate that USD 1 trillion may leave EM banks over the next few years. In the below/attached we outline an opportunity‑vulnerability continuum for 48 countries, noting where we see the highest vulnerabilities at present,” he added.
The SC report identified 48 countries across three buckets based on their vulnerability to deposit outflows.
Among the 16 most at‑risk economies are Egypt, Pakistan, Bangladesh, Sri Lanka, Türkiye, India, Brazil, South Africa, and Kenya.
Many of these countries face twin deficits, currency volatility, or have experienced recent balance‑of‑payments crises, highlighting the potential for deposit shifts.
While the $1 trillion represents roughly 2 % of aggregate deposits in these high‑vulnerability markets, SC warned that even modest flows could impact liquidity, credit availability, and exchange‑rate stability.
Stablecoins give EM consumers and corporates access to quasi‑USD accounts, offering faster, cheaper, and more accessible alternatives to traditional banking channels.
Adoption in EMs has historically outpaced that in developed markets, driven by a need for dollar‑denominated stores of value and more efficient payment networks.
Even with the U.S. GENIUS Act limiting interest or yield on compliant stablecoins, SC anticipates adoption will continue due to the fundamental demand for capital preservation over yield.
Speaking with Yellow.com, experts highlighted both the opportunities and risks.
Charley Brady, VP of Investor Relations at BitFuFu, said, “If a trillion U.S. dollars were to shift from emerging‑market banks into stablecoins, the impact would vary significantly by country.”
He added that in economies with weaker currencies and less developed regulatory oversight, outflows could raise funding costs for banks and increase exchange‑rate volatility, essentially creating a new form of shadow dollarization. But regulated issuance, transparent reserves, and banking participation can contain many of these risks.
Benjamin Grolimund, General Manager of Flipster UAE, emphasized that stablecoins are not necessarily undermining banks.
“Stablecoins are essentially a speedboat for banks, not a steamroller. When integrated through regulated on‑ and off‑ramps, they can channel activity back into the banking system, from FX flows to custody and compliance services,” he said.
Regulatory measures are also critical.
Rebecca Liao, CEO and Co‑Founder of Saga, noted, “The GENIUS Act signals that regulators want either bank‑like treatment or nothing at all. USDC is well‑positioned post‑GENIUS because it avoids pushing yield, while USDT and USDe carry greater regulatory risk if yield becomes core to their value proposition.”